Difference Between Online Trading and Offline Trading

What is Online Trading?

Online trading can be described as a virtual form of offline trading. Here, you can trade in securities involving buying, selling, and making other transactions on Internet trading platforms. These platforms are usually supplied by your brokerage company. Using these platforms, you are able to invest in many securities like stocks, bonds, mutual funds, exchange-traded funds, futures and currencies.

What is Offline Trading?

The broker plays a significant role in offline trading. Here, you communicate details of your securities to your broker. They, in turn, implement the order for you. Brokers often place your orders through a phone call, or you need to visit the brokerage firm. Despite the lengthy process, some investors, albeit a few, still trade offline due to the good rapport with the broker and feel uncomfortable using the online mode of trading. 

What are the Differences Between Online and Offline Trading?

The size of the online trading market is increasing globally at the rate of 6.4 per cent per year. Here is the difference between online and offline trading:

Parameters	Online Trading	Offline Trading
Advice Quality	Get detailed knowledge of stocks and other investment options	Dependent upon the broker's recommendation that may or may not be full-proof
Costs	Lower brokerage and transaction costs involved	Higher brokerage and transaction costs involved
Security	Full control over carrying out transactions	Your broker may operate your shares without your knowledge
Real-time information	Real-time information on securities and share markets. It is easily accessible via online trading platforms.	A time lag in sharing proper information. Real-time information is not provided in most cases.
Fraud	Almost negligible risk of fraud due to several layers of authentication. Close monitoring by SEBI	Higher risks of documents forging or inaccurate impersonation. Lack of proper checks and balances.

When Should You Choose Offline Trading?

Though online trading is more desirable than offline trading, most traders prefer offline trading due to specific requirements. Here are certain conditions under which you can choose offline trading:

• When you prefer personalized services 
• When you have limited access to the internet 
• When you prefer in-depth discussion on trading/investment strategies 
• When you desire to have a direct conversation with the broker 

What are the Additional Benefits of Trading via an Online Trading Account?

Online trading has numerous advantages, including being an easier, quicker, and more convenient option. Let’s discuss these advantages in detail: 

• Real-time Monitoring

With online trading, you can easily monitor your portfolios in real-time. By doing so, you can experience hassle-free trading and quick decision-making with timely adjustments to market changes.

• Convenience

One of the most popular advantages of online trading is the convenience. You can access trading 24/7, anytime and anywhere, giving you control over the transactions you make. 

• Lower Costs

Online trading has a lot of cost-saving benefits in comparison to offline trading. You get rid of paying brokerage fees and deal with fewer trade commissions, which simply means that you can have more of your earnings, which you can invest in the market. 

• Lesser Frauds

While doing online trading, your demat account is authenticated with intricate security measures. Also, online trading involves the application of several checks to legal policies under which the Securities Exchange Board of India (SEBI) pays adequate attention. 

• Algorithmic Trading
  
  

While focusing on manual trading benefits, algorithmic trading (automated trading using algorithms) could provide a glimpse into advanced strategies for more sophisticated traders and it is the fastest growing technology in the stock market.

What are Some Types of Online Trading Platforms?

You can access trading through multiple platforms. The best online trading platforms include: 

• Desktop Trading Software

It is a type of trading software that is installed on a PC or laptop. All you need is a good internet connection to use it. It offers various features that help you make the right decisions when buying and selling stocks.

• Browser/Web-based Platform

This web platform allows you to trade straight from the stockbroker's website with little to no internet usage. Additionally, it gives users access to a variety of financial services, such as trading in derivatives, buying initial public offerings (IPOs), and investing in bonds or mutual funds. 

• Mobile-based Trading App

A mobile trading app for Android and Apple devices. The prime advantage of such apps is that they allow you to trade anytime and anywhere at your ease. 

Conclusion

In conclusion, knowing the difference between online trading and offline trading lets you choose the suitable trading option. By weighing the pros and cons of trading options, you can gain a deeper understanding of trading. 

While traders prefer online trading due to real-time monitoring, enhanced convenience, and lower fraud, offline trading is desirable for those who prefer in-depth discussions of trading strategies. Ultimately, your decision should be in line with your requirements, considering factors like accessibility, control, and the level of involvement desired in the trading process.